Vacation and temporary contracts: a marriage gone wrong

Until recently, it was clear and consolidated case law of the Labor Division of the Supreme Court that temporary contracts are inadequate to cover cases in which employment is interrupted–such as leave, breaks, public holidays and vacation–because these are not cases of suspension of the employment contract with the right to return to the same job.

However, the Supreme Court left the door half open for the use of temporary contracts for these purposes, provided that the cause of recruitment is validly recorded (identification of the circumstances surrounding leave or breaks given to specific workers), and the increase in the company’s production needs is justified, with stances found in many judgments of the high courts of justice. 

Now, with this new judgment, dated October 30, 2019 (Rec. 1070/2017), the Supreme Court wants to close off this alternative widely used by companies to balance their workforce when faced with organizational imbalances caused by such breaks. 

In particular, the court firmly states that it is unacceptable to cover this type of break through a seasonal contract, and it must be proved, among other elements covered in article 15.1 b) Workers Statute, whether unforeseeable circumstances arise.

The court considers that the company is fully aware of its workforce, of their breaks taken as scheduled (as in the case of vacations) and that, therefore, this circumstance is totally predictable, which excludes temporary coverage through seasonal contracts.

This judgment creates uncertainty regarding whether the option of covering such breaks with seasonal contracts has now been ruled out definitively, or whether it can be maintained when circumstances are not foreseeable, i.e., in a much more residual capacity.

In short, it seems that the Supreme Court wanted to strike another blow to temporary employment, banning a widespread practice by companies, which will undoubtedly lead to organizational challenges, in addition to the legal consequences arising as a result of inappropriate temporary recruitment practices.

The challenge now for many companies will be to articulate a legally valid response to temporary labor requirements resulting from permanent staff members taking vacation and being on leave. If temporary employment is generally ruled out, HR departments must develop alternative formulas that allow for a similar degree of flexibility and cost control.